Moody’s says India ranks among most resilient EMs to weather global shocks. Here’s why

Credit ratings research and risk analysis firm Moody’s has said India has shown some of the strongest market resilience across recent global shocks and will continue to do so on the back of stable, clear and predictable monetary policy frameworks, well-anchored inflation expectations and adjustable exchange rates.

India has shown one of the most stable market responses across the last four major global shocks, including the onset of the COVID-19 pandemic in early 2020, the global inflation surge and US Federal Reserve tightening cycle in 2022, regional banking stress in the US in early 2023, and renewed tariff tensions in 2025.

Across these episodes, India saw only limited and short-lived widening in credit spreads, relatively contained currency depreciation and orderly movements in local bond yields, helping it maintain market access even during periods of heightened volatility, Moody’s said.


Large foreign exchange reserves have played a key role in anchoring investor confidence and smoothing currency movements, setting India apart from more vulnerable peers. A clear and predictable monetary policy framework, including early adoption of inflation targeting, has helped keep inflation expectations well anchored and improved the country’s ability to absorb external shocks.

Compared with more fragile emerging markets such as Turkey, Argentina and Nigeria, India has largely absorbed shocks through price adjustments rather than prolonged financing stress. This reflects deeper domestic markets and stronger policy credibility.

According to Moody’s Ratings, while India’s relatively high debt levels and weaker fiscal balance remain constraints, its early reforms and strong buffers position it among the better-placed emerging market sovereigns to navigate future global shocks.

The agency said that resilience can be strengthened by diversifying funding sources and lengthening debt maturities as part of better debt management practices. Countries such as India have extended maturities, which has helped reduce rollover risks during periods of global stress.

Developing local currency debt markets can also enhance resilience, although this comes with trade-offs. Lower reliance on external borrowing in India limits exposure to global risk sentiment.

India, Thailand and Indonesia entered recent periods of global stress with stronger foreign exchange reserve buffers, which helped contain currency volatility and support investor confidence. In contrast, sovereigns such as Nigeria, Argentina and Türkiye, with higher exposure to foreign-currency debt and relatively lower reserves, remain more vulnerable to external shocks.

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